Western companies have exited Russia in droves. New companies with owners from China and former Soviet republics are stepping in.

Western companies have been leaving Russia in droves since Moscow invaded Ukraine nearly two years ago — but new companies from alternative markets are stepping in to take their place.

• Nearly 10,000 companies with foreign involvement exited Russia in 2022 and the first 10 months of 2023.
• But the number of firms in Russia with co-owners from China and former Soviet republics has increased sharply.
• Russia is targeting new markets in the east following sweeping Western sanctions over the invasion.

In total, 9,600 companies with foreign affiliation left Russia in 2022 and the first 10 months of 2023, Vedomosti business daily reported on Thursday, citing a review of official data from the SPARK-Interfax professional information service.

However, the number of new companies in Russia with cofounders from former Soviet republics and China hassoared in those two years, per Vedomosti.

Companies with cofounders from former Soviet republics including Belarus, Kyrgyzstan, and Kazakhstan accounted for 59% of all new companies that established operations in Russia last year, per Vedomosti. Companies with cofounders from Turkey and India accounted for 3% and 2% of new firm registrations in that time frame, respectively.

Companies with cofounders from China accounted for 25% — or 1,500 — of new companies in Russia over the first 10 months of 2023.

But it doesn’t appear as if the new entrants are fully making up for the number of those that have left.

In all, 116,400 legal entities with foreign involvement were registered in Russia as of late 2023 — down by more than one-third from a peak of 185,000 foreign-affiliated entities recorded in 2017, according to Vedomosti.

Mikhail Nikolayev, the head of Russian ratings agency ACRA, told the Russian media outlet that while Western sanctions hit the number of foreign-affiliated companies in Russia, the realignment of Russia’s trade and supply chains eastward helped boost new company registrations from alternative markets, according to a Moscow Times translation.

Meanwhile, Russian businesses overseas have also been moving their assets home amid the pressures of Western sanctions and a push by President Vladimir Putin’s regime.